With the government cracking down on property speculation, questions raised on what drives fourth-quarter growth

China’s economy is on track to meet Beijing’s growth target of 6.5% to 7.0% for 2016 following the release of third quarter numbers in that range today.

However, what was clear in the GDP report is that sizzling property demand in the summer was a big part of the 6.7% growth reported. That’s raising questions about the real trajectory of China’s economy when you strip out the property boom, especially as the government this month started choking off property speculation with a series of policy crackdowns.

The DailyBrief

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Looking at the other numbers, growth in the service-oriented tertiary sector edged up to 7.6% versus 7.5% in the second quarter. That offset some of the drag from the so-called secondary sector, which includes heavy industry, construction and manufacturing. Growth in the secondary sector slowed to 6.1% from 6.3%, statistics from the National Bureau of Statistics showed Wednesday.

The government accredited the gains in the tertiary industry to buoyant retail, logistics and real estate activities, but blamed the slowdown in the secondary economy to a slump in construction.

The GDP figures were accompanied by separate reports that broke out numbers for September that also showed weakness in industrial production. Growth in September fell to 6.1% from 6.3% in August. The market expectation was for 6.4%.

Responding to concerns that curbs on property purchases could slow the economy, investors should not “exaggerate” the role of real estate in China’s economy, Sheng Laiyun, a spokesman at the National Bureau of Statistics, said to reporters in a press conference in Beijing Wednesday.

Total property sales increased 41.3% in the first three quarters this year, indicating why Beijing introduced curbs in 22 cities in October.

Despite the surge in property sales, overall housing inventory remains a major issue across China. Nationwide, unsold housing was at 696.12 million square meters for the end of September this year, down just 2.5% from the end of June.

While retail sales in the first three quarters this year rose 10.4% on year, the increase appears to come from housing related areas. Building and decoration materials went up by 15.4% with furniture related sales increasing by 13.9%.